Bank of England in ‘wait and see’ game over the economy

BANK of England rate-setters are likely to remain in “wait and see” mode well into the new year, analysts said yesterday, despite further downbeat economic data.

Minutes from December’s meeting of the Bank’s monetary policy committee (MPC), held a fortnight ago, revealed a continuing divide over whether to do more to stimulate the UK economy.

For a second month, David Miles was the sole MPC member calling for an expansion in the central bank’s asset purchase programme, called quantitative easing (QE). He voted for a £25 billion top-up to the £375bn scheme.

Meanwhile, there was a unanimous vote among the nine members to leave interest rates on hold at their historic low of 0.5 per cent.

The minutes were published as the CBI’s latest snapshot of the British high street suggested a weak start to the crucial festive trading period.

Its distributive trades survey showed that retail sales grew less than expected in the first part of December, although there have been signs that trading has gathered pace in recent days.

Investec economist Philip Shaw said it would probably take another couple of months of economic data to shift arguments over additional QE one way or another.

“Our central view is that the MPC will refrain from sanctioning any further QE over 2012 but clearly that’s subject to economic developments,” he noted.

Howard Archer, chief UK economist at forecasting group IHS Global Insight, said: “The indications are that they [the MPC] may well remain in ‘wait and see’ mode for some time to come.”

The Office for National Statistics is today due to release its November retail sales data. John Lewis is among the retailers to have reported brisk sales in recent days.